Biden Launches Inquiry to Fix the Failed PSLF Program
Biden has not yet extended student loan relief, which is scheduled to end September 30th 2021, but his Administration’s Department of Education announced Friday that it’s initiating a formal inquiry and asking PSLF applicants to share their experiences here. The public has a comment period that ends 09/24/2021.
According to Julie Margetta Morgan, senior advisor at the U.S. Department of Education, “We want to hear from the people who rely on this program about what is working and, more importantly, what isn’t working. We want to hear from experts across the nation about the challenges public service workers face and their ideas about how the PSLF Program can work better.”
The Public Service Loan Forgiveness (PSLF) and Temporary Expanded Public Service Loan Forgiveness (TEPSLF) programs were created as a way to repay public servants like teachers, nurses and firefighters by canceling a portion of their student debt. Both programs allow full-time professionals with careers in public service to have the remaining balance of their student loan debt erased after adhering to a qualifying repayment plan for a required number of years.
But just 2% of all PSLF applications were approved as of April 2021, leaving the vast majority of applicants on the hook for their student loans.
Recent Controversy Th PSLF program has been mired in controversy and challenges recently. FedLoan Servicing, also known as the Pennsylvania Higher Education Assistance Agency (PHEAA), services student loans for approximately 8.5 million student loan borrowers, which represents about 20% of all federal student loan borrowers. FedLoan Servicing announced on July 8, 2021 that they will not renew their student loan servicing contract with the DOE. This is significant because FedLoan is the only servicer currently assisting PSLF enrollees. A new report from the federal Consumer Financial Protection Bureau (CFPB) report found numerous problems with the administration of the PSLF program, and the agency blamed servicers for many of the issues. The agency “found a number of ways that student loan servicers gave incorrect information to borrowers, resulting in missteps that could cost consumers thousands of dollars,”
said the CFPB in a statement summarizing the findings.
A recently lawsuit filed by Attorney General Maura Healey of Massachusetts secured individualized account reviews and associated relief for thousands of Massachusetts student loan borrowers, including public servants and teachers was settled this year and may have played a role in FedLoan’s decision to discontinue service.
The settlement reached with the Pennsylvania Higher Education Assistance Agency (PHEAA), d/b/a FedLoan Servicing“resolves allegations that PHEAA made errors and provided misinformation to borrowers about PSLF eligibility requirements, causing borrowers to lose months of qualifying payments towards loan forgiveness. The settlement also resolves allegations that PHEAA delayed in processing Income-Driven Repayment (IDR) applications, causing borrowers to get off track with their payments, and erroneously caused Teacher Education Assistance for College and Higher Education (TEACH) Grant recipients to have their grants wrongly converted to loans.”
It is on the heels of that settlement, which provided an opportunity for more than 200,000 Massachusetts borrowers whose federal loans are serviced by PHEAA to submit a claim for a detailed account review, that the Biden Administration announced this inquiry.
What to do if you are enrolled in the PSLF Program
If you are currently enrolled in the PSLF program it is strongly suggested that you keep in frequent contact with your servicer as major changes are coming between now and the end of the year. Between FedLoan closing, the end of the CARES Act and millions of PSLF borrowers resuming payments on ever-changing IDR programs there is an extremely high probability of errors being made.
Those mistakes are potentially going to cost tens of thousands, if not hundreds of thousands of borrower’s time, money and continued denials of their loans erroneously. Want to avoid this ticking time bomb? Contact TitanPrep today and speak with a case manager to discuss your options and discuss how TitanPrep’s full suite of services can make student loan repayment stress-free.